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Decision CRTC 2000-93

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At a public hearing in Saskatoon, the Commission considered applications for FM radio stations to serve Lloydminster, from Sask-Alta Broadcasters Limited, which currently owns CKSA Lloydminster, and Peace River Broadcasting Corporation Ltd., licensee of CKHL-FM High Valley and CKYL and CKKX-FM Peace River. The Commission has approved the application by Peace River. The new station will offer a "pop/rock" musical format.

1..

The Commission approves the application by Peace River Broadcasting Corporation Ltd. (Peace River), for a broadcasting licence to carry on an English-language FM radio programming undertaking at Lloydminster. It denies the application by Sask-Alta Broadcasters Limited (Sask-Alta).

2.

Subject to the requirements of this decision, the Commission will issue a licence expiring 31 August 2006. This licence will be subject to the conditions specified in this decision and in the licence to be issued.

The public process - call for applications

3.

In 1998, Sask-Alta submitted an application for a licence to operate a new FM radio station to serve Lloydminster. On 4 March 1999, the Commission issued Public Notice CRTC 1999-37, announcing the receipt of an application for an FM radio station to serve Lloydminster, and calling for applications from other parties wishing to obtain such a licence.

4.

In response to the call, Peace River also filed an application for a new FM radio station in Lloydminster, and the two competing applications were considered together at the 16 November 1999 public hearing in Saskatoon.

Background

5.

In April 1998, the Commission adopted its new Commercial Radio Policy 1998 (Public Notice CRTC 1998-41). Public hearings in May and June of 1999 were among the first at which the Commission considered competing applications for new radio licences under that new policy. At those hearings, the Commission discussed with applicants various factors relating to the implementation of the policy, especially those that the Commission should consider when assessing competitive applications, in light of the new policy and the public interest.

6.

The Commission considers that, while their importance will vary depending on the specific circumstances of the market concerned, there are four main factors that are usually relevant to the evaluation of competing applications:

the quality of the applications

the impact on the market of a new entrant

the competitive state of the market, and

the diversity of news voices in the community.

7

The Commission discussed these factors with the two applicants at the public hearing in Saskatoon.

Evaluation of the competing applications

Quality of the applications

8.

The evaluation of the quality of an application takes into account the business plan and contributions to programming format diversity, Canadian content commitments, plans for the reflection of the community and commitments for the development of Canadian talent.

9.

The Lloydminster radio market currently consists of only one radio station, CKSA, which is owned by Sask-Alta. CKSA currently operates in a "contemporary country" musical format.

10.

Sask-Alta proposed a "Hot AC" format designed to appeal to an audience aged 12-34. The Peace River application proposed a pop/rock format with a target audience of 18-49. The Commission is satisfied that, with only one existing radio station in the market, either of the two proposals heard would provide additional programming diversity in Lloydminster.

11.

With respect to Canadian content, both applicants proposed to broadcast a minimum of 40% Canadian content in Category 2 (general popular) music weekly.

12.

With respect to Canadian talent development (CTD) initiatives, both applicants made commitments to participate in the Canadian Association of Broadcasters' (CAB) plan for CTD funding at a level of $400 annually, the amount identified by the CAB as appropriate for the Lloydminster market.

13.

In addition to its commitment to participation in the CAB plan, Peace River proposed to make direct contributions to CTD amounting to $44,200 annually. Peace River planned to award $2,000 of this total in yearly scholarships, and $42,200 was planned to be spent yearly on various aspects of a series of live concerts to be known as the "Slam Jam Live Series".

14.

At the hearing, the Commission discussed all proposed direct contributions with Peace River, and it was established that a portion ($15,000 annually) of the planned expenditures relating to the concert series had been identified as sponsorships. In Public Notice CRTC 1990-111 entitled An FM Policy for the Nineties, the Commission published a list of CTD initiatives it would generally accept. According to that notice, sponsorships do not qualify as direct contributions to CTD since the money does not originate from the station, but rather is donated from another party.

15.

Taking into account the deduction of $15,000 per year in sponsorships associated with the "Slam Jam" concert series, Peace River's total proposed commitment towards the development of Canadian talent is reduced to $146,000 over five years (or $29,200 yearly), over and above its contribution to the CAB fund.

16.

At the hearing, the Commission discussed certain CTD commitments with Sask-Alta. In view of the fact that a large portion of the original commitment was contingent upon the future construction of a new concert hall, the Commission has not accepted some of the proposals, including the salary for a CTD co-ordinator. These disqualifications reduce the proposed commitment to $15,200 over five years for the purchase of band instruments for local schools, over and above Sask-Alta's participation in the CAB plan.

17.

In assessing this aspect of the two applications, the Commission notes the relative monetary value of the two proposals, and considers that the Peace River plan to promote Canadian talent is significantly better funded than that of Sask-Alta.

Impact on the market

18.

The Commission is satisfied that one new station will not have an undue negative impact in Lloydminster. In reaching this conclusion the Commission has considered, among other factors, that the out-of-market tuning in Lloydminster is quite high, and a station proposing to target a currently unserved demographic could repatriate a significant audience. However, it does not believe that that market is capable of supporting more than one new entrant at this time. The revenues and profitability of the single existing station in the market and the projected economic growth in the area are not at levels which would successfully support more than one new station.

Competitive state of the market

19.

The Lloydminster commercial radio market currently involves only CKSA, the Sask-Alta AM radio station, although Sask-Alta also has common ownership with the two local television stations. Peace River expressed a concern during these proceedings that, even though Sask-Alta had no objection to the licensing of both applications, in that event Peace River's proposed stand-alone FM station might have to compete for advertising revenue with a combined AM/FM radio operation, as well as the two television stations. In response to this concern, Sask-Alta stated at the hearing that the majority of advertisers on CKSA do not advertise on television.

20.

The Commission is satisfied that, in licensing Peace River to provide one new radio station in the Lloydminster market, competition will be introduced to that radio market in a balanced fashion, with Sask-Alta and Peace River each having one radio station.

Diversity of news voices

21.

As noted above, Sask-Alta has common ownership with the two television stations serving Lloydminster. Shortell's Ltd., a company that owns CKSA-TV and CITL-TV, also owns Sask-Alta. In view of this common ownership, the Commission is satisfied that the approval of the Peace River application will add an additional news voice to the media in Lloydminster.

22.

Based on the evaluation of the four major factors discussed above, the Commission has concluded that the Lloydminster market will be able to sustain a second radio station, and considers that, of the two considered, the Peace River application represents the best proposal to serve that market.

The new station

23.

The Commission is satisfied that the Peace River business plan is sound and that its programming proposals will increase the diversity of radio programming available in Lloydminster by offering a pop/rock musical format, targeted to an audience aged 18-49.

24.

The licence will be subject to conditions related to levels of local programming, the general nature of the musical programming, Canadian content, financial support for Canadian talent, and the use of hit material on the new station. These conditions are either set out below or in the licence to be issued. As noted in PN 1999-137, standard conditions of licence are now set out only on the licence form.

Canadian content

25.

As noted above, Peace River made a commitment to broadcast a weekly minimum of 40% Canadian content in category 2 (general popular) music. This commitment exceeds the regulatory minimum, and is an important factor in the granting of the licence to Peace River. It is therefore a condition of licence that the licensee, as an exception to the percentage of Canadian musical selections required under section 2.2(8) of the Radio Regulations, 1986, in a broadcast week, devote 40% or more of its musical selections from content category 2 to Canadian selections broadcast in their entirety.

Canadian talent development

26.

As noted earlier, Peace River agreed to abide by the CAB Canadian talent development funding plan for the Lloydminster market. That plan prescribes a payment of $400 annually, to be distributed to eligible third parties. Adherence to this commitment shall be by condition of licence, as set out in the licence to be issued.

27.

Further to its participation in the CAB funding plan, the applicant stated that it would be willing to adhere to a condition of licence related to the provision of additional assistance to Canadian musical talent, with amounts of approximately $44,000 proposed to be expended yearly. That total was to include two $1,000 scholarships to be awarded annually, as well as approximately $42,000 for various costs involved in the Slam Jam concert series. As noted earlier, not all of the concert series costs could be considered direct costs related to Canadian talent development.

28.

Taking into account a deduction of $15,000 annually related to sponsorships, the applicant's total commitment, over and above its contribution to the CAB fund, is $29,200 annually. That amount will include two $1,000 scholarships, $6,200 to produce live recordings of the "Slam Jam" concerts, and $21,000, expected to be realized from the sale of concert CDs, which will be donated to local artists and arts organizations.

29.

The Commission accepts this additional commitment, and it is a condition of licence that, in addition to the requirements for Canadian talent development set out in the licence to be issued, the licensee shall make annual direct contributions of $29,200.

30.

The Commission reminds the licensee that all funds expended must meet the Commission's criteria for generally accepted, direct Canadian talent development, as set out in PN 1990-111.

Technical matters

31.

As proposed, the new FM station will operate on the frequency 106.1 MHz, channel 291C1, with an effective radiated power of 100,000 watts.

32.

The approval herein will only be effective and the licence will only be issued when the new station is ready to begin operation. When the licensee has completed construction and is prepared to commence operation, it must advise the Commission in writing. If the station is not constructed and ready to operate within 12 months of today’s date, extensions to this time frame may be granted provided that the licensee applies in writing to the Commission before the 12-month period or any extension of that period expires.

33.

The Department of Industry has advised the Commission that this application is conditionally technically acceptable. The Department will only issue a broadcasting certificate once it has determined that the proposed technical parameters will not create any unacceptable interference with aeronautical NAV/COM services.

34.

In accordance with section 22(1) of the Broadcasting Act, the Commission will only issue the licence and grant the authority to operate when it receives notification from the Department of Industry that its technical requirements have been met, and that a broadcasting certificate will be issued.

Other matters

35.

In Public Notice CRTC 1992-59 dated 1 September 1992 and entitled Implementation of an Employment Equity Policy, the Commission announced that the employment equity practices of broadcasters would be subject to examination by the Commission. In this regard, the Commission encourages the licensee to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

36.

The Commission acknowledges the interventions received in support of both of these applications. It has also considered the views expressed in interventions to the Peace River application from Sask-Alta, and from Okanagan Skeena Group Limited, licensee of CKKY Wainwright. Sask-Alta stated that it had no opposition to the licensing of Peace River, so long as the application by Sask-Alta was also approved. The intervention by Okanagan Skeena expressed the concern that the licensing of two new FM stations in Lloydminster would result in economic harm to CKKY. Okanagan Skeena further stated that, if only one new station were to be licensed, it was the view of Okanagan Skeena that Sask-Alta, the incumbent in the community, should be licensed before any new entrant is licensed. In making its decision, the Commission has considered the views of the interveners and of the applicants.

Related CRTC documents

• Public Notice 1999-137 – New licence form for commercial radio stations